CUB Argues that PGE Hydro Request Is Out of Line
Posted on June 14, 2005 by oregoncub
Tags, Utility Regulation
Portland General Electric (PGE) wants you to pay $20 to $30 million next year for this year’s low hydro power—power that you may not have used. This issue is at the heart of CUB’s testimony filing last week in PGE’s hydro (water power) deferred costs request, UE 165. PGE and Public Utility Commission staff have agreed that customers will have to pay in the future for the value of lost hydro from this year’s drought. CUB Executive Director Bob Jenks and Utility Analyst Lowrey Brown argued that this agreement is flawed for the following reasons:
1) The amount of deferred costs PGE is asking for assumes that the company would be paying spot market rates (as if they’d waited until the last minute to purchase power rather than buying it ahead of time) for power they must make up from lost hydro power. They have some advance notice already that this will be a dry summer and can be planning to obtain extra power over a period of months; they will not be forced, as this cost structure would suggest, to make last-minute purchase plans at inflated spot-market prices.
2) This cost adjustment assumes that customers are using the same amount of power as was projected last year when rates were set, whereas actual load on the power supply is down due to a mild winter. As a matter of fact, PGE has joined with Bonneville Power Administration (BPA), CUB, and other regional power organizations calling for people to conserve due to low hydro conditions; however, under this proposal, even if you conserve, they could charge you for some of the power you didn’t use. Talk about a shell game—customers should not have to pay for power that was never used!
3) We don’t think this cost adjustment is even legal. Deferred accounting rules (where a company keeps track of unexpected costs to add them into forecasted rates later) only apply to costs actually incurred, not costs simply projected to occur.
4) Finally, the cost deferral they are asking for is much too generous based upon previous cases. The company usually has to “eat” some higher power costs before passing them along to customers. After all, the profits they make are usually justified in terms of the risks they take. By historic standards, the mechanism proposed in the PGE/Staff agreement is ridiculously generous to the company, and not at all fair to ratepayers.
We at CUB do not think customers should be paying the excessive amount requested in this docket for deferred costs due to low hydro. Bob Jenks feels good about the stand we are taking in this case, and confident that our arguments are sound. “Any one of these arguments should be a clear-cut reason for the PUC to rethink this agreement. We hope that by the time they get to our final argument we will have thoroughly convinced them.”
We will let you know what the Public Utility Commission decides.
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03/10/17 | 0 Comments | CUB Argues that PGE Hydro Request Is Out of Line